The Ontario Securities Commission (OSC) has permanently banned a man who admitted to carrying out a fraudulent trading scheme that lost about $10 million of investors’ money.
The OSC announced today that it approved a settlement agreement between the commission and Kevin Warren Zietsoff, who admitted to securities fraud and agreed to be permanently banned from Ontario’s capital markets. In a parallel criminal proceeding, he pled guilty to a single count of fraud over $5,000, and the OSC indicates that its expected that he will be ordered to pay restitution to his victims as part of the criminal sentencing.
According to the OSC’s order, the scheme took in about $15.3 million from more than 80 victims in Canada and the U.S. Of that, about $10 million was lost, and $5.5 million was paid out to investors. (See Investment Executive, Toronto man charged in multimillion dollar fraud, August 19, 2013.)
According to the settlement, one of the biggest victims of the scheme were Zietsoff’s parents, who lost their life savings, about $2.5 million. Many of the other victims were friends and associates of the family.
The facts in the settlement indicate that Zietsoff persuaded his victims to invest with him by telling them he was a successful trader with a proven system, and promoting his promissory notes as ‘low risk or risk free’. When his trading scheme ran into trouble, he told the victims various stories, including that funds were tied up in bankrupt derivatives broker, MF Global.
The Ponzi scheme was revealed to police by Zietsoff himself in January 2013 when his counsel approached members of the RCMP’s Integrated Market Enforcement Team and reported that Zietsoff wanted to disclose his fraudulent activity and plead guilty to his offences as soon as possible. He also co-operated with the OSC, which had received complaints about his trading.